BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 33 Hearing Date: 6/13/2016
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|Author: |Quirk |
|-----------+-----------------------------------------------------|
|Version: |6/6/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Electrical corporations: energy storage systems
DIGEST: This bill makes new pumped hydroelectric storage
facilitates eligible for any increased energy storage system
targets adopted by the California Public Utilities Commission
(CPUC).
ANALYSIS:
Existing law:
1)Defines "load-serving entity" (LSE) as an electrical
corporation (investor-owned utility, or IOU), energy service
providers (ESP) or community choice aggregators (CCA).
(Public Utilities Code §380(k))
2)Requires the CPUC to determine appropriate targets, if any,
for LSEs to procure energy storage systems. Requires LSEs to
meet any targets adopted by the CPUC by 2015 and 2020.
Requires publicly owned utilities (POUs) to set their own
targets for the procurement of energy storage and then meet
those targets by 2016 and 2021. (Public Utilities Code §2835
et seq.)
3)Directs the California Energy Commission (CEC) and the CPUC,
where feasible, to authorize procurement of resources to
provide grid reliability services that minimize reliance on
system power and fossil fuel resources and, where feasible,
cost effective, and consistent with other state policy
objectives, increase the use of large- and small-scale energy
storage. (Public Utilities Code §400)
AB 33 (Quirk) PageB of?
This bill declares pumped hydroelectric storage facilities
eligible for any increases in energy storage procurement targets
adopted by the CPUC on or after January 1, 2017.
Background
Law requires procurement of energy storage systems. AB 2514
(Skinner, 2010), required CPUC to determine appropriate targets,
if any, for LSEs to procure energy storage systems by 2015 and
2020. The bill also directed POUs to set their own comparable
energy storage system procurement targets.
In October of 2013, the CPUC determined energy storage system
procurement targets applicable to the IOUs. The CPUC set
interim and final targets for the state's largest IOUs - Pacific
Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E) and
Southern California Edison (SCE) - that, in 2020, require the
three IOUs, together, to procure 1,325 megawatts of energy
storage.<1> The CPUC decision, while acknowledging that large
pumped hydroelectric facilities meet the statutory criteria
provided AB 2514, explicitly excluded pumped hydroelectric
storage facilities greater than 50 megawatts. The CPUC
justified this exclusion as follows:
The sheer size of pumped storage projects would dwarf other
smaller, emerging technologies; and as such, would inhibit
the fulfillment of market transformation goals. The
majority of pumped storage projects are 500 MW and over,
which means a single project could be used to reach each
target within a utility territory.
The CPUC, not unreasonably, concluded that an IOU could meet its
storage obligation through procurement of a single, large
pumped-storage project, thereby crowding out smaller, emerging
storage technologies. Such an outcome, the CPUC concluded,
would contradict the goal of energy storage market
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<1> See CPUC Decision 13-10-040.
AB 33 (Quirk) PageC of?
transformation.
The CPUC reports the IOUs have each progressed in meeting their
energy storage procurement goals. However, none has yet met its
final procurement goal in any category, other than SCE, which
has already exceeded the procurement goal for customer-side
storage. Of course, in keeping with the CPUC's program rules,
this procurement includes no large-scale pumped hydroelectric
storage facilities.
Large pumped hydroelectric facilities in California. Use of
hydroelectric facility to store energy is not new in California.
According to the CPUC, there are seven pumped storage
facilities that participate in the markets of the California
Independent System Operator (CAISO), as shown below:
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|California Existing Pumped Storage Facilities |
| |
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|--------------+--------+------------------------------|
| Name |Capacity| Owner |
| | 1) | |
| | | |
|--------------+--------+------------------------------|
| Castaic | 1250 | LADWP3)/DWR2) |
| | | |
|--------------+--------+------------------------------|
| Helms | 1200 | Pacific Gas and Electric |
| | | |
|--------------+--------+------------------------------|
| San Luis | 440 | DWR2) |
| | | |
|--------------+--------+------------------------------|
| Hyatt | 387 | DWR2) |
| | | |
|--------------+--------+------------------------------|
| Eastwood | 200 | Southern California Edison |
| | | |
|--------------+--------+------------------------------|
AB 33 (Quirk) PageD of?
| Thermalito | 84 | DWR2) |
| | | |
|--------------+--------+------------------------------|
| Lake Hodges | 40 | San Diego Water Authority |
| | | |
|--------------+--------+------------------------------|
| Diamond | 40 | Metropolitan Water District |
| Valley | | |
| | | |
|--------------+--------+------------------------------|
| O'Neil | 12 | United States Bureau of |
| | | Reclamation |
| | | |
|--------------+--------+------------------------------|
| TOTAL | 3,653 | |
| | | |
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|1) In megawatts. |
| |
|2) California Department of Water Resources. |
| |
|3) Los Angeles Department of Water and Power. |
| |
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The CPUC also notes that procurement rules allow pumped storage
to compete with other energy resources to meet a utility's
reliability needs and reports several additional proposed pumped
storage projects:
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|California and Proposed Pumped Storage Facilities |
| |
| |
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|-----------------+--------+-----------------------+----------------|
| Name |Capacity| Developer/Owner | Location |
| | 1) | | |
| | | | |
|-----------------+--------+-----------------------+----------------|
| Eagle Mountain | 1300 | Eagle Crest | Riverside |
| Project | | | County |
AB 33 (Quirk) PageE of?
| | | | |
|-----------------+--------+-----------------------+----------------|
| Lake Elsinore | 600 | Nevada Hydro | Eastern |
| Pumped Storage | | | Riverside |
| (LEAPS) | | | County |
| | | | |
|-----------------+--------+-----------------------+----------------|
| San Vincente | 500 | City of San Diego/San | San Diego |
| Project | | Diego County Water | County |
| | | Authority | |
| | | | |
|-----------------+--------+-----------------------+----------------|
|Mulqueeney Ranch | 280 | Brookfield Renewable | Altamont Pass |
| | | Energy Group | |
| | | | |
|-----------------+--------+-----------------------+----------------|
| TOTAL | 2,680 | | |
| | | | |
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|1) In |
|megawatts. |
| |
| |
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Many purposes of energy storage procurement targets. The CPUC
did not act unreasonably in concluding the energy storage goals
of AB 2514 included market transformation: implicit in the
imposition of procurement targets is the goal of altering market
outcomes from what they would otherwise be. However, whatever
its implicit goals, AB 2514 stated a number of explicit goals to
be achieved by the energy storage procurement program. Those
explicit statutory goals include:
Integration of intermittent generation from eligible
renewable energy resources into the reliable operation of
the transmission and distribution grid.
Allowing intermittent generation from eligible renewable
energy resources to operate at or near full capacity.
AB 33 (Quirk) PageF of?
Reducing the need for new fossil-fuel powered peaking
generation facilities by using stored electricity to meet
peak demand.
Reducing purchases of electricity generation sources
with higher emissions of greenhouse gases.
Eliminating or reducing transmission and distribution
losses, including increased losses during periods of
congestion on the grid.
Reducing the demand for electricity during peak periods
and achieve permanent load-shifting by using thermal
storage to meet air-conditioning needs.
Avoiding or delaying investments in transmission and
distribution system upgrades.
Using energy storage systems to provide the ancillary
services otherwise provided by fossil-fueled generating
facilities.
Large-scale pumped hydroelectric facilities, like smaller energy
storage systems using varying technologies, have the potential
to meet these statutory goals. For this reason, the CAISO -
always preoccupied with the management of intermittent renewable
energy resources - recently urged the CPUC to consider (1)
increasing current energy storage system procurement targets to
allow for large storage resources while not undermining support
for smaller and newer technologies, and (2) earmarking capacity
within those procurement targets specifically for pumped
storage.<2>
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<2> COMMENTS OF THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR
CORPORATION ON TRACK 2 ISSUES, filed February 2, 2016.
AB 33 (Quirk) PageG of?
No reason to exclude large pumped hydro, but? There is no
obvious, compelling reason why the energy storage procurement
targets adopted by the CPUC must exclude pumped hydroelectric
storage facilities. Such facilities have the potential to meet
the program's statutory goals, such as the integration of
intermittent renewable energy resources. However, the CPUC was
right to worry that utilities could meet their storage targets
by reliance on a small number of very large pumped hydroelectric
storage facilities. Such an outcome may harm smaller,
still-developing storage technologies. Bill proponents contend
smaller and distributed storage technologies already are
well-provided for by state procurement targets and subsidies.
In any case, existing statute already makes large pumped-storage
eligible for the CPUC's storage targets. Therefore, this bill
simply restates, with emphasis, existing law.
To make clear that existing law does not prevent the CPUC from
making pumped hydroelectric storage facilities of any size
eligible to meet future energy storage targets the CPUC may
adopt, and to ensure the CPUC maintains discretion in adopting
future energy storage targets in order to best achieve the
state's energy and environmental goals, this analysis recommends
the author amend this bill, as follows:
Public Utilities Code §2836.8.
(a) Beginning January 1, 2017, if the commission
increases the targets for a load-serving entity to
procure viable and cost-effective energy storage systems,
pumped hydroelectric storage facilities of any size that
become operational on or after January 1, 2017, shall be
eligible without limit to the extent that those
facilities meet otherwise applicable requirements.
(b) Subdivision (a) is iterative of existing law and
does not limit the commission's discretion in developing
or adopting targets for a load-serving entity to procure
viable and cost-effective energy storage systems.
Double Referral. Should this bill be approved by the committee,
it will be re-referred to the Senate Committee on Environmental
Quality for its consideration.
AB 33 (Quirk) PageH of?
Prior/Related Legislation
AB 2514 (Skinner, Chapter 469, Statutes of 2010) required CPUC
to determine appropriate targets, if any, for LSEs to procure
energy storage systems. The bill required LSEs to meet any
targets adopted by the CPUC by 2015 and 2020. The bill required
POUs to set their own targets for the procurement of energy
storage and then meet those targets by 2016 and 2021.
SB 886 (Pavley, 2015) requires the CPUC to adopt energy storage
system procurement targets applicable to every load-serving
entity and the governing board of each local publicly owned
electric utility to adopt comparable energy storage procurement
targets; requires each load-serving entity and locally owned
public electric utility to plan for the procurement of energy
storage systems before fossil-fuel-based generation; and
requires each electrical corporation to propose measures to
encourage customers to install energy storage systems. The bill
passed the Senate 25-14 and is pending referral in the Assembly.
AB 1258 (Skinner, 2013) would have required the CEC to perform a
technical analysis of the potential uses of existing
hydro-electric and pumped storage facilities to provide
additional operational flexibility to integrate eligible
renewable energy sources into the grid. The bill was held in
Assembly Committee on Appropriations.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
Association of California Water Agencies
Brookfield
Clean Power Campaign
EDF Renewable Energy
Eagle Crest Energy, Inc.
San Diego County Water Authority
OPPOSITION:
None received
AB 33 (Quirk) PageI of?
ARGUMENTS IN SUPPORT: According to the author:
When CPUC implemented AB 2514 (Skinner, 2010)
[D.13-10-040], the CPUC elected to place an arbitrary
restriction on what types of energy storage would satisfy
the procurement mandate. It determined that any pumped
hydroelectric storage project over 50 megawatts (MW) in
size would not qualify. Unfortunately, this means that
large-scale pumped hydroelectric storage does not satisfy
any of the numerous requirements placed on IOUs. Because it
does not "check a box" for the utilities, there is very
little for a utility to procure it. This is despite pumped
storage being cost-effective and important in helping the
state integrate additional renewable energy onto the grid.
AB 33 allows IOUs to purchase pumped hydroelectric storage
of all sizes to meet in any future procurement mandate for
energy storage. This is not a storage procurement mandate
or an increase to an existing procurement mandate. AB 33
simply ensures that pumped hydroelectric storage is not
unnecessarily excluded from future energy storage
procurement mandates.
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